##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended September 30, 2001
Commission File No. 000-24615

LANDAIR CORPORATION(Exact name of registrant as specified in its charter)

|                                |  |                                     
|------------------------------- |  | ------------------------------------
|Tennessee                       |  | 62-1743549                          
|                               
|                               
|                               
|                               
|(State or other jurisdiction of |  | (I.R.S. Employer Identification No.)
|                               
|                               
|                               
|                               
|incorporation or organization)  |  |                                     

|                                         |  |           
|---------------------------------------- |  | ----------
|430 Airport Road                         |  |           
|                                        
|                                        
|                                        
|                                        
|Greeneville, Tennessee                   |  | 37745     
|                                        
|                                        
|                                        
|                                        
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code: (423) 636-7000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES [X]      NO [   ]

The number of shares outstanding of the registrants common stock, $.01 par
value, as of October 30, 2001 was 4,833,045.





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TABLE OF CONTENTS



|                                                                                              |                                                      |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  |  | 
|Part I. Financial Information                                                                
|Item 1. Financial Statements (Unaudited)                                                     
|                                                                                              | Condensed Consolidated Balance Sheets               
|                                                                                              | Condensed Consolidated Statements of Income         
|                                                                                              | Condensed Consolidated Statements of Cash Flows     
|                                                                                              | Notes to Condensed Consolidated Financial Statements
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 3. Quantitative and Qualitative Disclosure of Market Risk                               
|Part II. Other Information                                                                   
|Item 1. Legal Proceedings                                                                    
|Item 2. Changes in Securities and Use of Proceeds                                            
|Item 3. Defaults Upon Senior Securities                                                      
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|Item 5. Other Information                                                                    
|Item 6. Exhibits and Reports on Form 8-K                                                     
|Signatures                                                                                   



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##### Table of Contents



Table of Contents

Landair Corporation

|           |  |                                                                                       |  |  |    |        |    | 
|---------- |  | ------------------------------------------------------------------------------------- |  |  | -- | ------ | -- | 
|           |  |                                                                                       |  |  |    | Page  
|           |  |                                                                                       |  |  |    | Number
|           |  |                                                                                       |  |  |    |       
|Part I     |  | Financial Information                                                                 |  |  |    |       
|          
|          
|          
|          
|Item 1     |  | Financial Statements (Unaudited)                                                      |  |  |    |       
|          
|          
|          
|          
|           |  | Condensed
Consolidated Balance Sheets -
    September 30, 2001 and December 31, 2000  |  |  | 3  |       
|          
|          
|          
|          
|           |  | Condensed Consolidated Statements of Income - Three and nine                          |  |  |    |       
|          
|          
|          
|          
|           |  | months ended
September 30, 2001 and 2000, respectively                                |  |  | 4  |       
|          
|          
|          
|          
|           |  | Condensed Consolidated Statements of Cash Flows -                                     |  |  |    |       
|          
|          
|          
|          
|           |  | Nine months ended September 30, 2001 and 2000                                         |  |  | 5  |       
|          
|          
|          
|          
|           |  | Notes to
Condensed Consolidated Financial Statements - September 30, 2001             |  |  | 6  |       
|          
|          
|          
|          
|Item 2     |  | Management's
Discussion and Analysis of Financial Condition and Results of Operations |  |  | 10 |       
|          
|          
|          
|          
|Item 3     |  | Quantitative and Qualitative Disclosure of Market Risk                                |  |  | 15 |       
|          
|          
|          
|          
|Part II    |  | Other Information                                                                     |  |  |    |       
|          
|          
|          
|          
|Item 1     |  | Legal Proceedings                                                                     |  |  | 17 |       
|          
|          
|          
|          
|Item 2     |  | Changes in Securities and Use of Proceeds                                             |  |  | 17 |       
|          
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|Item 3     |  | Defaults Upon Senior Securities                                                       |  |  | 17 |       
|          
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|          
|Item 4     |  | Submission of Matters to a Vote of Security Holders                                   |  |  | 17 |       
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|Item 5     |  | Other Information                                                                     |  |  | 17 |       
|          
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|          
|Item 6     |  | Exhibits and Reports on Form 8-K                                                      |  |  | 17 |       
|          
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|          
|          
|Signatures |  |                                                                                       |  |  |    |        | 18 | 

2



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##### Table of Contents






Part I. Financial Information




Item 1. Financial Statements (Unaudited)

Landair Corporation




Condensed Consolidated Balance Sheets

|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |        |    | 
|---------------------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------ | --------------------------------- | -- | ------------ | ------ | ------ | -- | 
|                                               |                                                                        |                                                                                                        |        | September 30,                     |    | December 31,
|                                               |                                                                        |                                                                                                        |        | 2001                              |    | 2000        
|                                               |                                                                        |                                                                                                        |        |                                   |    |             
|                                               |                                                                        |                                                                                                        |        | (Unaudited)                       |    | (Note 1)    
|                                               |                                                                        |                                                                                                        |        | (In thousands, except share data)
|Assets                                         |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|                                              
|                                              
|                                              
|                                              
|Current assets:                                |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Cash and cash equivalents                                              |                                                                                                        | $      | 7                                 |    |              | $      | 9      |   
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts receivable, less allowance of $558 in 2001 and
$1,267 in 2000 |                                                                                                        |        | 10,773                            |    |              |        | 12,923 |   
|                                              
|                                              
|                                              
|                                              
|                                               | Other current assets                                                   |                                                                                                        |        | 4,009                             |    |              |        | 5,687  |   
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|Total current assets                           |                                                                        |                                                                                                        | 14,789 |                                   |    |              | 18,619 |       
|                                              
|                                              
|                                              
|                                              
|Property and equipment                         |                                                                        |                                                                                                        | 79,976 |                                   |    |              | 88,555 |       
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |                                                                        |                                                                                                        | 25,223 |                                   |    |              | 29,783 |       
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|                                               |                                                                        |                                                                                                        | 54,753 |                                   |    |              | 58,772 |       
|                                              
|                                              
|                                              
|                                              
|Other assets                                   |                                                                        |                                                                                                        | 114    |                                   |    |              | 3,936  |       
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|Total assets                                   |                                                                        | $                                                                                                      | 69,656 |                                   |    | $            | 81,327 |       
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|Liabilities and Shareholders Equity           |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|                                              
|                                              
|                                              
|                                              
|Current liabilities:                           |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts payable                                                       |                                                                                                        | $      | 2,958                             |    |              | $      | 3,072  |   
|                                              
|                                              
|                                              
|                                              
|                                               | Accrued expenses                                                       |                                                                                                        |        | 7,208                             |    |              |        | 8,957  |   
|                                              
|                                              
|                                              
|                                              
|                                               | Current portion of long-term debt                                      |                                                                                                        |        | 2,115                             |    |              |        | 8,495  |   
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|Total current liabilities                      |                                                                        |                                                                                                        | 12,281 |                                   |    |              | 20,524 |       
|                                              
|                                              
|                                              
|                                              
|Long-term debt, less current portion           |                                                                        |                                                                                                        | 10,144 |                                   |    |              | 20,223 |       
|                                              
|                                              
|                                              
|                                              
|Deferred income taxes                          |                                                                        |                                                                                                        | 13,266 |                                   |    |              | 10,254 |       
|                                              
|                                              
|                                              
|                                              
|Shareholders equity:                          |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|                                              
|                                              
|                                              
|                                              
|                                               | Preferred stock                                                        |                                                                                                        |        |                                  |    |              |        |       |   
|                                              
|                                              
|                                              
|                                              
|                                               | Common stock, $.01 par value:                                          |                                                                                                        |        |                                   |    |              |        |        |   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                        | Authorized
shares - 45,000,000
Issued and outstanding shares - 4,833,045 in 2001
and 4,886,136 in 2000 |        |                                   | 48 |              |        |        | 49 | 
|                                              
|                                              
|                                              
|                                              
|                                               | Additional paid-in capital                                             |                                                                                                        |        | 37,752                            |    |              |        | 38,078 |   
|                                              
|                                              
|                                              
|                                              
|                                               | Retained deficit                                                       |                                                                                                        |        | (3,835                            | )  |              |        | (7,801 | ) 
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|Total shareholders equity                     |                                                                        |                                                                                                        | 33,965 |                                   |    |              | 30,326 |       
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       
|Total liabilities and shareholders equity     |                                                                        | $                                                                                                      | 69,656 |                                   |    | $            | 81,327 |       
|                                               |                                                                        |                                                                                                        |        |                                   |    |              |        |       

See notes to condensed consolidated financial statements.

3



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##### Table of Contents



Landair Corporation




Condensed Consolidated Statements of Income

(Unaudited)


|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |        |  
|-------------------------- | ------------------------------------- | - | ------------------ | ----- | ----------------- | - | ------------------------------------- | ------ | ------------- | - | ------ | ------ | - | - | ------ | ------ | -
|                           |                                       |   | Three months ended |       | Nine months ended
|                           |                                       |   |                    |       |                  
|                           |                                       |   | September 30,      |       | September 30,     |   | September 30,                         |        | September 30,
|                           |                                       |   | 2001               |       | 2000              |   | 2001                                  |        | 2000         
|                           |                                       |   |                    |       |                   |   |                                       |        |              
|                           |                                       |   |                    |       |                   |   | (In thousands, except per share data) |        |               |   |       
|Operating revenue          |                                       | $ | 25,825             |       |                   | $ | 31,960                                |        |               | $ | 81,883 |        |   | $ | 98,064 |       
|                          
|                          
|                          
|                          
|Operating expenses:        |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|                          
|                          
|                          
|                          
|                           | Salaries, wages and employee
benefits |   |                    | 8,718 |                   |   |                                       | 10,313 |               |   |        | 27,529 |   |   |        | 31,989 |  
|                          
|                          
|                          
|                          
|                           | Purchased transportation              |   |                    | 5,883 |                   |   |                                       | 9,718  |               |   |        | 20,271 |   |   |        | 28,315 |  
|                          
|                          
|                          
|                          
|                           | Fuel and fuel taxes                   |   |                    | 2,761 |                   |   |                                       | 2,915  |               |   |        | 8,661  |   |   |        | 9,595  |  
|                          
|                          
|                          
|                          
|                           | Depreciation and amortization         |   |                    | 2,286 |                   |   |                                       | 3,760  |               |   |        | 7,072  |   |   |        | 11,255 |  
|                          
|                          
|                          
|                          
|                           | Insurance and claims                  |   |                    | 487   |                   |   |                                       | 1,025  |               |   |        | 2,028  |   |   |        | 3,859  |  
|                          
|                          
|                          
|                          
|                           | Operating leases                      |   |                    | 501   |                   |   |                                       | 497    |               |   |        | 1,353  |   |   |        | 1,612  |  
|                          
|                          
|                          
|                          
|                           | Other operating expenses              |   |                    | 2,326 |                   |   |                                       | 2,749  |               |   |        | 7,593  |   |   |        | 8,533  |  
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|                           |                                       |   | 22,962             |       |                   |   | 30,977                                |        |               |   | 74,507 |        |   |   | 95,158 |       
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|Income from operations     |                                       |   | 2,863              |       |                   |   | 983                                   |        |               |   | 7,376  |        |   |   | 2,906  |       
|                          
|                          
|                          
|                          
|Other income (expense):    |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|                          
|                          
|                          
|                          
|                           | Interest expense                      |   |                    | (244  | )                 |   |                                       | (669   | )             |   |        | (1,046 | ) |   |        | (2,090 | )
|                          
|                          
|                          
|                          
|                           | Other, net                            |   |                    | 110   |                   |   |                                       | 115    |               |   |        | 270    |   |   |        | 420    |  
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|                           |                                       |   | (134               | )     |                   |   | (554                                  | )      |               |   | (776   | )      |   |   | (1,670 | )     
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|Income before income taxes |                                       |   | 2,729              |       |                   |   | 429                                   |        |               |   | 6,600  |        |   |   | 1,236  |       
|                          
|                          
|                          
|                          
|Income taxes               |                                       |   | 1,091              |       |                   |   | 170                                   |        |               |   | 2,634  |        |   |   | 481    |       
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|Net income                 |                                       | $ | 1,638              |       |                   | $ | 259                                   |        |               | $ | 3,966  |        |   | $ | 755    |       
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|Income per share:          |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|                          
|                          
|                          
|                          
|                           | Basic                                 |   | $                  | 0.34  |                   |   | $                                     | 0.05   |               |   | $      | 0.82   |   |   | $      | 0.14   |  
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       
|                           | Diluted                               |   | $                  | 0.33  |                   |   | $                                     | 0.05   |               |   | $      | 0.80   |   |   | $      | 0.13   |  
|                           |                                       |   |                    |       |                   |   |                                       |        |               |   |        |        |   |   |        |       

See notes to condensed consolidated
financial statements.

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Landair Corporation




Condensed Consolidated Statements of Cash Flows

(Unaudited)


|                                                       |  |                   |         |               |  |   |         |  
|------------------------------------------------------ |  | ----------------- | ------- | ------------- |  | - | ------- | -
|                                                       |  | Nine months ended
|                                                       |  |                  
|                                                       |  | September 30,     |         | September 30,
|                                                       |  | 2001              |         | 2000         
|                                                       |  |                   |         |              
|                                                       |  | (In thousands)   
|Cash provided by operations:                           |  |                   |         |               |  |   |         |  
|                                                      
|                                                      
|                                                      
|                                                      
|Net income                                             |  | $                 | 3,966   |               |  | $ | 755     |  
|                                                      
|                                                      
|                                                      
|                                                      
|Loss (gain) on disposal                                |  |                   | 22      |               |  |   | (248    | )
|                                                      
|                                                      
|                                                      
|                                                      
|Depreciation and amortization                          |  |                   | 7,072   |               |  |   | 9,617   |  
|                                                      
|                                                      
|                                                      
|                                                      
|Other, net                                             |  |                   | 3,508   |               |  |   | 3,321   |  
|                                                       |  |                   |         |               |  |   |         |  
|Net cash provided by operations                        |  |                   | 14,568  |               |  |   | 13,445  |  
|                                                      
|                                                      
|                                                      
|                                                      
|Investing activities:                                  |  |                   |         |               |  |   |         |  
|                                                      
|                                                      
|                                                      
|                                                      
|Proceeds from disposal of property and
equipment       |  |                   | 2,302   |               |  |   | 2,246   |  
|                                                      
|                                                      
|                                                      
|                                                      
|Purchases of property and equipment                    |  |                   | (86     | )             |  |   | (1,373  | )
|                                                       |  |                   |         |               |  |   |         |  
|Net cash provided by investing activities              |  |                   | 2,216   |               |  |   | 873     |  
|                                                      
|                                                      
|                                                      
|                                                      
|Financing activities:                                  |  |                   |         |               |  |   |         |  
|                                                      
|                                                      
|                                                      
|                                                      
|Payments of long-term debt                             |  |                   | (16,459 | )             |  |   | (9,428  | )
|                                                      
|                                                      
|                                                      
|                                                      
|Repurchase of common stock                             |  |                   | (514    | )             |  |   | (4,922  | )
|                                                      
|                                                      
|                                                      
|                                                      
|Proceeds from exercise of stock options                |  |                   | 28      |               |  |   |        |  
|                                                      
|                                                      
|                                                      
|                                                      
|Common stock issued under employee stock purchase plan |  |                   | 159     |               |  |   | 31      |  
|                                                      
|                                                      
|                                                      
|                                                      
|Cash used in financing activities                      |  |                   | (16,786 | )             |  |   | (14,319 | )
|                                                       |  |                   |         |               |  |   |         |  
|Decrease in cash and cash equivalents                  |  | $                 | (2      | )             |  | $ | (1      | )
|                                                       |  |                   |         |               |  |   |         |  

See notes to condensed consolidated
financial statements.

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##### Table of Contents



Landair Corporation




Notes to Condensed Consolidated Financial Statements

(Unaudited)
September 30, 2001


1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine-month period ended September 30, 2001 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Landair Corporation Annual Report on Form
10-K for the year ended December 31, 2000.

The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date, but does not include all of the financial
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements.

Certain reclassifications have been made to the prior year financial statements
to conform to the 2001 presentation. These reclassifications had no effect on
net income as previously reported.

2. Comprehensive Income

The Company had no items of other comprehensive income in 2001 or 2000 and,
accordingly, comprehensive income is equivalent to net income.

3. Impairment of Long-Lived Assets

In accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, the Company performs a periodic review of
its long-lived assets, including goodwill and other intangibles, for impairment
whenever events or changes in circumstances indicate that the carrying amount of
these assets may not be recoverable. During the fourth quarter of 2000, as part
of its periodic review of long-lived assets, the Company evaluated its fleet of
tractors and trailers and determined that much of the equipment was
underutilized. As a result, the Company committed to a plan in December 2000 to
dispose of excess revenue equipment. Based on the Companys impairment analysis,
it was determined that the carrying value of certain tractors and trailers
exceeded fair value, less estimated costs of disposal. Accordingly, in the
fourth quarter of 2000, the Company recorded an impairment charge of $6.6
million as a result of its impairment review.

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##### Table of Contents



Landair Corporation

Notes to Condensed Consolidated Financial Statements (continued)

3. Impairment of Long-Lived Assets (continued)

The Company substantially completed its plan to dispose of excess revenue
equipment during the third quarter of 2001. The plan included the sale of
tractors and trailers held for disposal at December 31, 2000 as well as the sale
of assets held and used in operations. In addition, the plan included a trade in
of two to three used trailers in exchange for one new trailer with a trailer
manufacturer. The Company intends to use in operations certain tractors and
trailers originally identified for disposal during the fourth quarter of 2000.
Such assets are included within revenue equipment at September 30, 2001.

4. Restructuring Costs

In December 2000, the Company committed to various exit and restructuring
activities. These activities included plans to exit operations at four leased
terminals (Dallas, Memphis, Camden and Chicago). In accordance with Emerging
Issues Task Force (EITF) Consensus No. 94-3, the Company accrued $56,000 in
December 2000 for future rent payments and termination penalties under
non-cancelable leases at the facilities. The Company exited the leases and paid
the remaining lease payments and termination penalties in January 2001.

Certain employees were terminated related to the restructuring activities. The
Company accrued termination benefits of $56,000 as of December 31, 2000 related
to severance benefits that had been communicated to the respective employees as
of December 31, 2000. The Company incurred an additional $225,000 of
restructuring costs related to termination benefits during the nine month period
ended September 30, 2001. The Company paid $281,000 of restructuring costs
related to termination benefits during the nine month period ended September 30,
2001.

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##### Table of Contents



Landair Corporation

Notes to Condensed Consolidated Financial Statements (continued)

5. Income Per Share

The following table sets forth the computation of basic and diluted income per
share (in thousands, except per share data):

|                           |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |       | 
|-------------------------- | ------------------------------------------------------------------------------ | - | ------------------ | ----- | ----------------- | - | ------------- | ----- | ------------- | - | ---- | ----- |  | - | ---- | ----- | 
|                           |                                                                                |   | Three months ended |       | Nine months ended
|                           |                                                                                |   |                    |       |                  
|                           |                                                                                |   | September 30,      |       | September 30,     |   | September 30, |       | September 30,
|                           |                                                                                |   | 2001               |       | 2000              |   | 2001          |       | 2000         
|                           |                                                                                |   |                    |       |                   |   |               |       |              
|Numerator:                 |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |      
|                          
|                          
|                          
|                          
|                           | Numerator for basic and diluted
earnings per share  net income                |   | $                  | 1,638 |                   |   | $             | 259   |               |   | $    | 3,966 |  |   | $    | 755   | 
|                          
|                          
|                          
|                          
|Denominator:               |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |      
|                          
|                          
|                          
|                          
|                           | Denominator for basic earnings
per share  weighted-average
shares             |   |                    | 4,832 |                   |   |               | 4,883 |               |   |      | 4,839 |  |   |      | 5,574 | 
|                          
|                          
|                          
|                          
|                           | Effect of dilutive stock options                                               |   |                    | 109   |                   |   |               | 57    |               |   |      | 91    |  |   |      | 52    | 
|                           |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |      
|                           | Denominator for diluted earnings
per share  adjusted weighted-
average shares |   |                    | 4,941 |                   |   |               | 4,940 |               |   |      | 4,930 |  |   |      | 5,626 | 
|                           |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |      
|Basic earnings per share   |                                                                                | $ | 0.34               |       |                   | $ | 0.05          |       |               | $ | 0.82 |       |  | $ | 0.14 |      
|                           |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |      
|Diluted earnings per share |                                                                                | $ | 0.33               |       |                   | $ | 0.05          |       |               | $ | 0.80 |       |  | $ | 0.13 |      
|                           |                                                                                |   |                    |       |                   |   |               |       |               |   |      |       |  |   |      |      

6. Income Taxes

For the three and nine months ended September 30, 2001 and 2000, the effective
income tax rate varied from the statutory federal income tax rate of 34%
primarily as a result of the effect of state income taxes, net of the federal
benefit, and permanent differences.

7. Commitments and Contingencies

The primary claims in the Companys business are workers compensation, property
damage, auto liability and medical benefits. Most of the Companys insurance
coverage provides for self- insurance levels with primary and excess coverage
which management believes is sufficient to adequately protect the Company from
catastrophic claims. In the opinion of management, adequate provision has been
made for all incurred claims up to the self-insured limits, including provision
for estimated claims incurred but not reported.

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##### Table of Contents



Landair Corporation

Notes to Condensed Consolidated Financial Statements (continued)

7. Commitments and Contingencies (continued)

The Company estimates its self-insurance loss exposure by evaluating the merits
and circumstances surrounding individual known claims, and by performing
hindsight analysis to determine an estimate of probable losses on claims
incurred but not reported. Such losses could be realized immediately as the
events underlying the claims have already occurred as of the balance sheet
dates.

Because of the uncertainty of the ultimate resolution of outstanding claims, as
well as uncertainty regarding claims incurred but not reported, it is possible
that managements provision for these losses could change materially in the near
term. However, no estimate can currently be made of the range of additional loss
that is at least reasonably possible.

8. Impact of Recently Issued Accounting Standard

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities,effective January 1, 2001. The
effect of the adoption of SFAS No. 133 was not material to the Companys earnings, financial
position or cash flows.

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business
Combinations,and No. 142,
Goodwill and Other Intangible Assets,effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statement is expected to have no effect on net
income upon adoption.

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##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations

Results of Operations

The following table sets forth the percentage relationship of expense items to
operating revenue for the periods indicated.

|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |      |  
|-------------------------- | ------------------------------------- |  | ------------------ | ---- | ----------------- |  | ------------- | ---- | ------------- |  | ----- | ---- | - |  | ----- | ---- | -
|                           |                                       |  | Three months ended |      | Nine months ended
|                           |                                       |  |                    |      |                  
|                           |                                       |  | September 30,      |      | September 30,     |  | September 30, |      | September 30,
|                           |                                       |  | 2001               |      | 2000              |  | 2001          |      | 2000         
|                           |                                       |  |                    |      |                   |  |               |      |              
|Operating revenue          |                                       |  | 100.0              | %    |                   |  | 100.0         | %    |               |  | 100.0 | %    |   |  | 100.0 | %   
|                          
|                          
|                          
|                          
|Operating expenses:        |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|                          
|                          
|                          
|                          
|                           | Salaries, wages and
employee benefits |  |                    | 33.7 |                   |  |               | 32.3 |               |  |       | 33.6 |   |  |       | 32.6 |  
|                          
|                          
|                          
|                          
|                           | Purchased transportation              |  |                    | 22.8 |                   |  |               | 30.4 |               |  |       | 24.8 |   |  |       | 28.9 |  
|                          
|                          
|                          
|                          
|                           | Fuel and fuel taxes                   |  |                    | 10.7 |                   |  |               | 9.1  |               |  |       | 10.6 |   |  |       | 9.8  |  
|                          
|                          
|                          
|                          
|                           | Depreciation and
amortization         |  |                    | 8.9  |                   |  |               | 11.8 |               |  |       | 8.6  |   |  |       | 11.5 |  
|                          
|                          
|                          
|                          
|                           | Insurance and claims                  |  |                    | 1.9  |                   |  |               | 3.2  |               |  |       | 2.4  |   |  |       | 3.9  |  
|                          
|                          
|                          
|                          
|                           | Operating leases                      |  |                    | 1.9  |                   |  |               | 1.6  |               |  |       | 1.7  |   |  |       | 1.6  |  
|                          
|                          
|                          
|                          
|                           | Other operating
expenses              |  |                    | 9.0  |                   |  |               | 8.6  |               |  |       | 9.3  |   |  |       | 8.7  |  
|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|                           |                                       |  | 88.9               |      |                   |  | 97.0          |      |               |  | 91.0  |      |   |  | 97.0  |     
|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|Income from operations     |                                       |  | 11.1               |      |                   |  | 3.0           |      |               |  | 9.0   |      |   |  | 3.0   |     
|                          
|                          
|                          
|                          
|Other income (expense):    |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|                          
|                          
|                          
|                          
|                           | Interest expense                      |  |                    | (0.9 | )                 |  |               | (2.1 | )             |  |       | (1.3 | ) |  |       | (2.1 | )
|                          
|                          
|                          
|                          
|                           | Other, net                            |  |                    | 0.4  |                   |  |               | 0.4  |               |  |       | 0.3  |   |  |       | 0.4  |  
|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|                           |                                       |  | (0.5               | )    |                   |  | (1.7          | )    |               |  | (1.0  | )    |   |  | (1.7  | )   
|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|Income before income
taxes |                                       |  | 10.6               |      |                   |  | 1.3           |      |               |  | 8.0   |      |   |  | 1.3   |     
|                          
|                          
|                          
|                          
|Income taxes               |                                       |  | 4.2                |      |                   |  | 0.5           |      |               |  | 3.2   |      |   |  | 0.5   |     
|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     
|Net income                 |                                       |  | 6.4                | %    |                   |  | 0.8           | %    |               |  | 4.8   | %    |   |  | 0.8   | %   
|                           |                                       |  |                    |      |                   |  |               |      |               |  |       |      |   |  |       |     

Three Months Ended September 30, 2001 Compared to Three Months Ended September 30, 2000

Operating revenue decreased by $6.1 million, or 19.2%, to $25.8 million in the
third quarter of 2001 from $32.0 million in 2000. This decrease was the result
of a 25.6% decrease in the average tractors in service, including
owner-operators, during the third quarter of 2001 compared to the same period in
2000, partially offset by higher equipment utilization. During the third
quarters of 2001 and 2000, the average tractors in service were 720 and 968,
respectively. The average revenue per tractor per week increased from $2,485 per
tractor per week in the third quarter of 2000 to $2,619 per tractor per week in
the third quarter of 2001.

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The operating ratio (operating expenses as a percentage of operating revenue)
was 88.9% for the third quarter of 2001 compared to 97.0% for 2000. The decrease
in the operating ratio in 2001 was due primarily to lower depreciation and
amortization, insurance and claims, and other factors as discussed below.

Salaries, wages and employee benefits were 33.7% of operating revenue in the
third quarter of 2001 compared to 32.3% in 2000. The increase in salaries, wages
and employee benefits as a percentage of operating revenue was due to an
increase in the percentage of Company-operated tractors in service. During the
third quarter of 2001, Company-operated tractors in service represented approximately 75% of the total average tractors in service including
owner-operators. In the third quarter of 2000, Company-operated tractors in
service represented approximately 61.8% of the total average tractors in
service.

Purchased transportation was 22.8% of operating revenue in the third quarter of
2001 compared to 30.4% in 2000. The decrease in purchased transportation as a
percentage of operating revenue in the third quarter of 2001 was primarily
attributable to a decrease in the percentage of owner-operated tractors as a
percent of the Companys overall fleet. In the third quarter of 2001,
owner-operated tractors averaged approximately 25.0% of the Companys fleet. In
the third quarter of 2000, owner-operated tractors averaged approximately 38.2%
of the Companys fleet.

Fuel and fuel taxes were 10.7% of operating revenue in the third quarter of 2001
compared to 9.1% in 2000. The increase in fuel and fuel taxes as a percentage of
operating revenue during the third quarter of 2001 is primarily attributable to the increase in the
percentage of Company-operated tractors compared to owner-operated tractors
during the period as previously discussed. Owner-operators are responsible for
purchasing their own fuel.

Depreciation and amortization expense as a percentage of operating revenue was
8.9% in the third quarter of 2001 compared to 11.8% in 2000. The decrease in
depreciation and amortization as a percentage of operating revenue is
attributable to a decrease in the average number of tractors and trailers in
service in the third quarter of 2001 compared to the same period in 2000. The
average number of Company tractors in service decreased from 598 in the third
quarter of 2000 to 540 in the third quarter of 2001. The average number of
trailers in service decreased from 3,093 in 2000 to 1,907 in 2001. Additionally,
depreciation and amortization expense in the third quarter of 2000 included
approximately $107,000 of goodwill amortization expense associated with the
acquisition of Laker Express, Inc. (Laker) in 1999. In the fourth quarter of
2000, the Company determined that the goodwill associated with the acquisition
of Laker was fully impaired. As a result, the Company recorded an impairment
charge in the fourth quarter of 2000 for the unamortized portion of the
goodwill. Accordingly, the operating results for the three month period ended
September 30, 2001 do not include goodwill amortization expense associated with
the purchase of Laker.

Insurance and claims were 1.9% of operating revenue in the third quarter of 2001
compared to 3.2% in 2000. The decrease in insurance and claims expense is due
primarily to a decrease in

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the frequency and severity of accidents as well as lower insurance premium costs
during the third quarter of 2001 compared with 2000.

Operating leases were 1.9% of operating revenue in the third quarter of 2001
compared to 1.6% in 2000.

Other operating expenses, a large component of which relates to equipment
maintenance, were 9.0% of operating revenue in the third quarter of 2001
compared to 8.6% in 2000.

Interest expense was $244,000, or 0.9% of operating revenue, in the third
quarter of 2001 compared to $669,000 or 2.1% in 2000. The decrease was due to
lower average net borrowings during 2001 resulting from the Companys strategy
to repay long-term debt coupled with lower effective interest rates in the third
quarter of 2001 compared to the third quarter of 2000.

The combined federal and state effective tax rate for the third quarter of 2001
was 40.0% compared to 39.6% for 2000.

As a result of the foregoing factors, net income increased by $1.3 million from
$259,000 in the third quarter of 2000 to $1.6 million in the third quarter of
2001.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30, 2000

Operating revenue decreased by $16.2 million, or 16.5%, to $81.9 million during
the first nine months of 2001 from $98.1 million in 2000. This decrease was a
result of a 21.8% decrease in the average tractors in service, including
owner-operators, during the first nine months of 2001 compared to the same
period in 2000, partially offset by higher equipment utilization. During the
first nine months of 2001 and 2000, the average tractors in service were 784 and
1,003, respectively. The average revenue per tractor per week was $2,699 per
tractor per week in the first nine months of 2001 and $2,442 for the first nine
months of 2000.

The operating ratio (operating expenses as a percentage of operating revenue)
was 91.0% for the first nine months of 2001 compared to 97.0% for 2000. The
decrease in the operating ratio in 2001 resulted primarily from the factors
discussed below.

Salaries, wages and employee benefits were 33.6% of operating revenue in the
first nine months of 2001 compared to 32.6% in 2000. The increase in salaries,
wages and employee benefits as a percentage of operating revenue resulted
primarily from restructuring costs related to termination benefits of $215,000
incurred during the first nine months of 2001 and an increase in the percentage
of Company-operated tractors in service. During the first nine months of 2001,
Company-operated tractors in service represented approximately 70.4% of the
total average tractors in service including owner-operators. During the first
nine months of 2000, Company-operated tractors in service represented
approximately 64.8% of the total average tractors in service including
owner-operators.

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##### Table of Contents



Purchased transportation was 24.8% of operating revenue in the first nine months
of 2001 compared to 28.9% in 2000. The decrease in purchased transportation as a
percentage of operating revenue in the first nine months of 2001 was primarily
attributable to a decrease in the ratio of owner-operated tractors to
Company-operated tractors. Owner-operators represented 29.6% of the Companys
average tractors in service during the nine months ended September 30, 2001
compared to 35.2% for the same prior year period.

Fuel and fuel taxes were 10.6% of operating revenue in the first nine months of
2001 compared to 9.8% in 2000. The increase in fuel and fuel taxes as a
percentage of operating revenue during the third quarter of 2001 resulted
primarily from an increase in the ratio of Company-operated tractors to
owner-operated tractors during the period. Owner-operators are responsible for
purchasing their own fuel.

Depreciation and amortization expense as a percentage of operating revenue was
8.6% in the first nine months of 2001 compared to 11.5% in 2000. The decrease in
depreciation and amortization as a percentage of operating revenue is
attributable to a decrease in the average number of tractors and trailers in
service in the first nine months of 2001 compared to the same period in 2000.
The average number of Company tractors in service decreased from 650 in the
first nine months of 2000 to 552 in the first nine months of 2001. The average
number of trailers in service decreased from 3,133 in 2000 to 2,086 in 2001.
Additionally, depreciation and amortization expense during the first nine months
of 2000 included approximately $322,000 of goodwill amortization expense
associated with the acquisition of Laker in 1999. In the fourth quarter of 2000,
the Company determined that the goodwill associated with the acquisition of
Laker was fully impaired. As a result, the Company recorded an impairment charge
in the fourth quarter of 2000 for the unamortized portion of the goodwill.
Accordingly, the operating results for the nine month period ended September 30,
2001 do not include goodwill amortization expense associated with the purchase
of Laker.

Insurance and claims were 2.4% of operating revenue in the first nine months of
2001 compared to 3.9% in 2000. The decrease in insurance and claims expense as a
percentage of operating revenue was a result of decreased frequency and severity
of accidents which was partially offset by higher insurance premiums during the
first nine months of 2001 compared with 2000.

Operating leases were 1.7% of operating revenue in the first nine months of 2001
compared to 1.6% in 2000.

Other operating expenses, a large component of which relates to equipment
maintenance, were 9.3% of operating revenue in the first nine months of 2001
compared to 8.7% in 2000.

Interest expense was $1.0 million, or 1.3% of operating revenue, in the first
nine months of 2001 compared to $2.1 million or 2.1% in 2000. The decrease was
due to lower average net borrowings during 2001 resulting from the Companys
strategy to repay long-term debt and lower effective interest rates in 2001
compared to 2000.

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##### Table of Contents



The combined federal and state effective tax rate for the first nine months of
2001 was 40.0% compared to 38.9% for 2000.

As a result of the foregoing factors, net income increased by approximately $3.2
million from net income of $755,000 in the first nine months of 2000 to net
income of $4.0 million in the first nine months of 2001.

Liquidity and Sources of Capital

Working capital needs have generally been met with cash flows from operations
and borrowings under credit agreements. Net cash provided by operating
activities of the Company was $14.4 million for the first nine months of 2001
compared with $13.4 million in the same period of 2000.

Net cash provided by investing activities was approximately $2.4 million in the
first nine months of 2001 compared with net cash provided by investing
activities of $873,000 in the same period of 2000. Investing activities
consisted primarily of the proceeds from disposal of property and equipment
during the first nine months of 2001 and 2000.

Net cash used in financing activities was $16.8 million in the first nine months
of 2001 compared with net cash used in financing activities of $14.3 million in
the same period of 2000. Financing activities consisted primarily of the
repayment of long-term debt and the repurchase of the Companys common stock
during the first nine months of 2001 and 2000.

The Companys credit facilities include a working capital line of credit and an
equipment financing facility. Subject to maintenance of financial covenants and
ratios, these credit facilities permit the Company to borrow up to $15.0 million
under the working capital line of credit and $15.0 million under an equipment
financing facility. Interest rates for advances under the facilities vary based
on covenants related to total indebtedness, cash flows, results of operations
and other ratios. The facilities bear interest at LIBOR plus 0.75% to 1.75% and
are secured by accounts receivable and certain revenue equipment. The Companys
working capital line of credit expires in November 2002. Availability under the
line of credit is reduced by the amount of outstanding letters of credit. Among
other restrictions, the terms of the line of credit require maintenance of
certain levels of net worth and other financial ratios. As of September 30,
2001, the Company had $4.0 million of borrowings and $3.2 million of letters of
credit outstanding under the working capital line of credit facility and
$473,000 of borrowings outstanding under the equipment financing facilities. As
of September 30, 2001, the Company had $7.8 million and $15.0 million of
available additional borrowing capacity under the working capital line of credit
and the equipment financing facilities, respectively.

The Company maintains a $20 million equipment financing facility with a retail
finance company. At September 30, 2001, $5.1 million was outstanding under this
credit facility. Additionally, the Company had $2.7 million outstanding in an
installment note payable at September 30, 2001.

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##### Table of Contents



The Company expects to finance its normal operating requirements and planned
revenue equipment purchases through available borrowing capacity under existing
lines of credit, future borrowings under installment notes for revenue
equipment, operating lease financing and cash generated by operations. The
availability of debt financing or equity capital will depend upon the Companys
financial condition and results of operations as well as prevailing market
conditions and other factors over which the Company has little or no control.

Forward-Looking Statements

The Company, or its executive officers and directors on behalf of the Company,
may from time to time make written or oral forward-looking statements. Written
forward-looking statements may appear in documents filed with the Securities and
Exchange Commission, in press releases and in reports to shareholders. Oral
forward-looking statements may be made by the Companys executive officers and
directors on behalf of the Company to the press, potential investors, securities
analysts and others. The Private Securities Litigation Reform Act of 1995
contains a safe harbor for forward-looking statements. The Company relies on
this safe harbor in making such disclosures. In connection with this safe harbor
provision, the Company is hereby identifying important factors that could cause
actual results to differ materially from those contained in any forward-looking
statement made by or on behalf of the Company. Without limitation, factors that
might cause such a difference include economic factors such as recessions,
inflation, higher interest rates, downturns in customer business cycles,
competition, surplus inventories, loss of a major customer, fuel price
increases, the Companys lack of prior operating history as an independent
entity, the inability of the Companys information systems to handle increased
volume of freight, and the lack of availability and/or insufficient compensation
of qualified drivers and independent owner-operators needed to serve the
Companys transportation needs. The Company disclaims any intent or obligation
to update these forward-looking statements.




Item 3. Quantitative and Qualitative Disclosure of Market Risk

The Company is exposed to market risk from changes in interest rates and
commodity prices. To reduce such risks, the Company selectively uses forward
purchase contracts for fuel. All such forward purchase transactions are
authorized.

Interest Rates

At September 30, 2001 and 2000, the fair value of the Companys total variable
rate debt was estimated to be approximately $4.5 million and $20.8 million,
respectively, which approximated carrying value based on the Companys current
incremental borrowing rates for similar types of borrowing arrangements. At
these borrowing levels, a hypothetical 10.0% adverse change in interest rates on
the debt would increase interest expense and decrease income before income taxes
by approximately $5,000 and $132,000 in the first nine months of 2001 and 2000,
respectively. These amounts were determined by considering the impact of the
hypothetical

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##### Table of Contents



interest rate increase on the Companys borrowing cost at the September 30, 2001
and 2000 borrowing levels.

Commodities

The availability and price of fuel are subject to fluctuations due to factors
such as seasonality, weather, government programs and policies, and changes in
global production. To reduce price sensitivity caused by market fluctuations,
the Company from time to time will enter into forward purchase contracts. At
September 30, 2001 and 2000, the Company had no outstanding commitments to
purchase fuel.

The above market risk discussion and the estimated amounts presented are
forward-looking statements of market risk based on the assumed occurrence of
certain adverse market conditions. Actual results in the future may differ
materially from those projected due to actual developments in the market.

16



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##### Table of Contents






Part II. Other Information




Item 1. Legal Proceedings

The Company is, from time to time, a party to litigation arising in the normal
course of its business, most of which involve claims for personal injury and
property damage incurred in connection with the transportation of freight.
Management believes that none of these actions, individually or in the
aggregate, will have a material adverse effect on the financial condition or
results of operations of the Company.




Item 2. Changes in Securities and Use of Proceeds

Not Applicable




Item 3. Defaults Upon Senior Securities

Not Applicable




Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable




Item 5. Other Information

Not Applicable




Item 6. Exhibits and Reports on Form 8-K

The following exhibits are included herein:

|    |  |                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits  Not applicable                                                                                               
|   
|(b) |  | Reports on Form 8-K  The Company did not file any reports on Form 8-K
during the three months ended
September 30, 2001.

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##### Table of Contents






Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |  |                  |  |                     |  |                                                                                       
|----- |  | ---------------- |  | ------------------- |  | --------------------------------------------------------------------------------------
|      |  |                  |  | Landair Corporation
|     
|      |  |                  |  |                     |  |                                                                                       
|     
|Date: |  | November 1, 2001 |  | By:                 |  | /s/ Andrew J. ManteyAndrew J. Mantey
Chief Financial Officer
and Senior Vice President

18